Greek debt ne­go­ti­a­tions break down

Athens and Ber­lin trade ac­cu­sa­tions, but the pres­i­dent of the Euro­pean Union pre­dicts ‘ a happy end.’

LON­DON — At­tempts to forge an agree­ment over Greece’s trou­bled f inances ended in fail­ure Thurs­day, just f ive days be­fore the Mediter­ranean coun­try is due to make a loan re­pay­ment or risk go­ing into de­fault.

Fi­nance min­is­ters from the 19- na­tion Eu­ro­zone gath­ered in Brus­sels said they would meet again Satur­day to try to bridge the glar­ing dif­fer­ences be­tween Athens and its in­ter­na­tional cred­i­tors in or­der to stave off the threat of a bank­ruptcy that could force Greece to aban­don the com­mon euro cur­rency.

“It will need still many hours. The last hours have been re­ally crit­i­cal,” Euro­pean Union Pres­i­dent Don­ald Tusk said, adding, “But I have a good hunch that, un­like in Sopho­cles’ tragedies, this Greek story will have a happy end.”

It was a rare note of op­ti­mism on a day marked by more of the ac­ri­mony — es­pe­cially be­tween Greece and Ger­many, the EU’s big­gest econ­omy — that has made reach­ing a deal dif­fi­cult.

An agree­ment is nec­es­sary to un­lock the f inal in­stall­ment of funds from two bailouts that Athens has re­ceived from in­ter­na­tional lenders to­tal­ing about $ 270 bil­lion. With­out it, Greece will be un­able to re­pay $ 1.8 bil­lion it owes . the In­ter­na­tional Mon­e­tary Fund by Tues­day’s dead­line.

The two sides are at odds over how Greece plans to keep its bud­get in sur­plus so it can ser­vice its debt even as its econ­omy lan­guishes in a deep and dam­ag­ing de­pres­sion.

Hopes of a deal re­ceived a boost this week af­ter new pro­pos­als were put for­ward by Greek Prime Min­is­ter Alexis Tsipras. Elected on an anti- aus­ter­ity plat­form, Tsipras’ left- wing ad­min­is­tra­tion has pledged to hold the line on pro­tect­ing pen­sions and public sec­tor wages, and has pro­posed rais­ing more money through higher taxes, par­tic­u­larly on busi­nesses.

Tsipras has also de­manded some sort of debt re­lief or write- down, with­out which most econ­o­mists say Greece will find it im­pos­si­ble to re­turn to growth be­cause of the stag­ger­ing amount of public debt it must pay off.

But the cred­i­tor coun­tries and in­sti­tu­tions sent back Tsipras’ plan re­plete with cor­rec­tions and ob­jec­tions writ­ten in red ink, say­ing that rais­ing tax would ham­per growth and in­sist­ing on more spend­ing cuts.

The Greek leader ac­cused Eu­ro­zone ne­go­tia­tors of try­ing to hu­mil­i­ate his coun­try, while se­nior Ger­man of­fi­cials com­plained that Athens had taken a step back­ward.

Ger­man Chan­cel­lor An­gela Merkel said Thurs­day that reach­ing an agree­ment was es­sen­tial be­fore the mar­kets opened Mon­day and be­fore Greek banks, op­er­at­ing on a life­line from the Euro­pean Cen­tral Bank, ran out of money. Wor­ried de­pos­i­tors have pulled out bil­lions of eu­ros over the last sev­eral days in what an­a­lysts de­scribe as, if not a ful­lon run, then at least a slow jog on the banks.

Jeroen Di­js­sel­bloem, who heads the group of 19 Eu­ro­zone f inance min­is­ters, said a fresh round of coun­ter­pro­pos­als ar­rived from Greece too late Thurs­day to be prop­erly eval­u­ated and voted on by Euro­pean Union lead­ers gath­er­ing for a two­day sum­mit.

“On a num­ber of is­sues there is still a wide gap with the Greek author­i­ties,” Di­js­sel­bloem told re­porters.

Down- to- the- wire ne­go­ti­a­tions with Greece have been the norm through­out the 51⁄ 2- year- old euro debt cri­sis, as both sides stake out max­i­mal­ist po­si­tions and chal­lenge each other to blink.

Although this it­er­a­tion might fol­low the same script, an­a­lysts warn that time is truly run­ning short. Even if an agree­ment is reached among Euro­pean lead­ers in Brus­sels, the deal will then be sub­ject to ap­proval by var­i­ous na­tional par­lia­ments.

That in­cludes Ger­many and Greece, where Tsipras faces a po­ten­tial re­volt from back­benchers who be­lieve he has al­ready back­tracked too much on their party’s anti- aus­ter­ity pledges. In Ber­lin, Merkel must face down dis­grun­tled law­mak­ers who be­lieve Greece has got­ten away with too much.

Julien Warnand EPA

EU leader Don­ald Tusk said reach­ing a deal “will need still many hours.”